In addition to bailing out Detroit, U.S. taxpayers may be asked to pay the account for a GM-Chrysler merger

By David Kiley and David Welch

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Taxpayers are already being asked to bail without Detroit. Do they also have to play investing. banker for a GM-Chrysler merger—as well as help uncovered a private right giant?

General Motors (GM) as September has been talking to Chrysler’sitting majority owner, Cerberus Capital Management, near acquiring Chrysler (BusinessWeek.com, 10/17/08). GM management is convinced that acquiring Chrysler’s $11 billion in cash, and then gutting the company of redundant jobs, give by will provide it with the revenue, cash flow, and cash reserves it needs to make it through 2009 and into 2010. Moody’s Investor Service (MCO) this week downgraded GM’s debt, and reiterated that that other rating agencies have said: that GM will run away of operating cash next year without new sources of capital.

GM, which lost $18.8 billion in the first six months of the year and still hasn’t reported its third-quarter losses, is looking for quick help from the government. Sources familiar through the negotiations between the carmaker and the White House say GM is seeking $10 billion in the form of loans, which it claims it indispensably to get Chrysler. In exchange, GM, according to industry sources, has dangled the possibility of the powers that subsist seizing an equity stake in the new enterprise, as well as specifics put on protecting a number of future jobs.

Even granting the Treasury Dept.’s decision to spend $250 billion to buy stakes in small banks and other financial institutions received general approval from members of Congress, the form of the government owning a stake in GM is not popular. "I haven’t studied it," says Representative Barney Frank (D-Mass.) who is chair of the House Financial Services Committee, adding that, "We’d all have existence skeptical of taking equity."

And overtly helping GM cathedral a deal to take upper Chrysler doesn’t have a lot of cheerleaders either. Even Michigan’s Democratic congressional delegation, which can be counted adhering to defend and promote the Big Three automakers, and who are not at all vulnerable in next week’s election, are bitter to structure a rescue package so that it is not seen to help the job-killing merger capture place.

Dennis Fitzgibbons, chief of staff on the House Energy & Commerce Committee, which is headed by Representative John Dingell (D-Mich.), says his cover with bosses has never favored directly assisting GM to acquire Chrysler. "The congressman favors additional help to the sedulousness, such as an extent of the loan bale to help counterbalance advanced technology investments they have to make," says Fitzgibbons.

At a debate last week, Michigan’s senior Democratic Senator, Carl Levin, was initially quoted viewed like supporting a plan where the government helped the companies sink. But his office quickly issued a alteration saying he was misquoted. Levin in like manner supports expanded loans to offset technology investments sentient made by GM, Ford (F) and Chrysler to comply with tougher fuel plan standards.

Congress is looking to help all three auto companies, but, as one Capitol Hill staffer puts it: "The pack is going to have to look right and smell right, and it is going to have to have the support of the UAW [United Auto Workers]."

The biggest sticking point is the almost guaranteed loss of more 35,000 jobs as a decision of a GM-Chrysler merger. GM, says the same Hill staffer, is operating out some promises on protecting a certain number of blue-collar jobs, though most of Chrysler’s white-collar jobs would be lost.

UAW President Ron Gettelfinger has voiced his opposition both to a GM acquisition of Chrysler and to renegotiating the terms of the remain labor contract, which resulted in the UAW distress above management of its own health care in exchange for GM funding the Voluntary Employee Beneficiary Association that would manage auto workers’ health plans (BusinessWeek.com, 9/26/07).